Japan Faces Prolonged Real Wage Decline Despite Promises of Increases

As Japan marks two years of falling real wages, upcoming salary hikes from major firms offer a glimmer of hope against rising inflation.

March 2024 recorded a 2.5% drop in real wages, continuing a two-year trend of wage erosion amid inflation pressures.
Despite overall wage declines, some large Japanese companies have pledged over 5% wage increases, the highest in three decades.
Consumer prices in March rose 3.1%, exceeding the Bank of Japan's 2% inflation target, complicating economic recovery efforts.
The Bank of Japan remains optimistic, expecting a virtuous cycle of wage growth and demand-led inflation to begin soon.
Labor shortages and low unemployment at 2.6% suggest potential for sustained wage improvements in the long term.